Steve Mellon, Post-Gazette Paul Skoutelas announces his resignation as Port Authority chief executive in 2005. Mr. Skoutelas and other authority employees had started to collect pension benefits in 2002, investing the money in special accounts until leaving the agency. The policy since has been stopped. Click photo for larger image.

Internal Revenue Service records show that William W. Millar received $348,353 in salary and $110,183 in deferred compensation in 2004 as president/chief executive officer of the Washington, D.C.-based American Public Transportation Association.

At the same time, the Port Authority of Allegheny County sent him a $5,258 monthly pension check and paid for his health, vision, dental and prescription insurance even though he left as authority CEO more than a decade ago.

Mr. Millar's situation is an example of why so much public criticism is being directed toward the transit agency, why its money problems are growing and why the board of directors is poised to enact significant reforms covering about 300 current administrative and nonunion workers effective July 1.

"Management has done a horrible job the last two decades," county Chief Executive Dan Onorato said recently. "They took 'golden parachutes.' They created pilot programs [for themselves]. It's outrageous. We have management people taking pensions that I believe are obscene."

State Auditor General Jack Wagner earlier this month described the authority's lifetime pension and health-care perks as "lavish" and "abusive."

"The self-indulgence of management has been financially abusive and must be reversed," he said while delivering an interim audit report. "These generous offerings were developed by management for management at the expense of taxpayers."

A review of authority pensions, however, shows that more than "management" has been taking advantage of public generosity.

Warren W. George, 72, began as a driver with Critchlow Bus Lines before it was folded into the Port Authority in 1964. He has been collecting $3,400 a month and health-care benefits since he began collecting a pension March 1, 1992, after serving in various positions, including president of Local 85, Amalgamated Transit Union. That union represents 2,600 bus-trolley operators, mechanics and other hourly workers.

Today, Mr. George is president of ATU International, the largest labor organization representing transit workers in the U.S. and Canada.

IRS records show the ATU paid him a $187,510 salary in 2004, contributed another $29,137 into his "employee benefit plan" and provided an expense account, making his monthly pension checks from the authority a bonus in his personal income.

The financially troubled transit agency's highest pension recipient, by far, is Paul Skoutelas, 53, another former CEO, who is collecting $8,566 a month.

He worked for the authority for 18 years, but his lifetime pension is based on 29 years of employment, a result of a soon-to-be-ended policy that enabled him to buy 11 years of service with public agencies in New Jersey, Florida and Bucks County and roll them into the authority's more lucrative plan. Mr. Skoutelas paid $181,530 to "buy back" his prior time.

In addition, Mr. Skoutelas implemented a controversial and since-suspended "Deferred Retirement Option Program" in 2002 that enabled dozens of management people, including him, to begin collecting their pensions while still working and investing them in special accounts until leaving the agency.

		To view the file below you must have Adobe Acrobat Reader, it is available as a free download from Adobe Chart: Port Authority's top 50 retirees receiving the highest monthly pensions based on the latest information available.

He walked out the door with a $380,213 lump-sum payment from his DROP account. A dozen other managers have done the same, while 30 active employees are still left in the program, including a $52,500-a-year executive secretary.

Mr. Skoutelas took unused sick and vacation time to extend his official employment until Dec. 1, 2005, although his last day in the Heinz 57 Center was in early September 2005 -- another policy matter that is to be addressed by the authority board.

He attributed his high pension partly to being "the most recent retirement at the executive level" under a program he said provides the same benefits to everyone on a formula based on years of service and salary. But his pension was boosted by the 29 years of credited service at a time when his annual salary had risen to $210,000.

Mr. Skoutelas, of Mt. Lebanon, now is a senior vice president at Parsons Brinckerhoff, an international consulting and engineering firm.

Mr. Millar said he served his time to qualify for benefits, acted in accordance with rules and moved to a cheaper authority-sponsored health plan this year.

"I pay my required share for health care and I've been paying it for a number of years," he said. "It is what it is."

At its March 30 meeting, the authority board is to "accelerate the departure" of the 30 employees still in the DROP program; eliminate "lifetime health care" for nonunion employees retiring after June 30; eliminate $500 monthly pension supplements; eliminate unlimited accrual of sick leave; and restrict the buy-back of previous employment for pension purposes to years of military service.

Current CEO Steve Bland said the changes address calls for reform and financial belt-tightening, "sacrifices just as public transportation customers will be making" in June, when bus-trolley routes are to be modified or cut because of funding problems.

The agency also is planning a fare increase, layoffs and other steps to address a projected $80 million shortfall in the 2007-08 budget.

While management employees have been able to buy back service time from other public entities, including those in other states, union employees have been limited to applying four years of military time toward pensions.

Both Mr. Bland and Mr. Onorato have pledged to address health-care and pension costs for union employees when their current contract expires June 30, 2008.

"Legacy costs will be dealt with as they come up," Mr. Onorato said. "The goal is to make sure everybody is under the system, that benefits will be the same" and in line with what the cash-strapped agency can afford.

As a result of the last labor negotiations, new union and nonunion employees hired after Dec. 1, 2005, must be at least 55 years old and have 25 years of service to receive a full pension, as opposed to the previous policy requiring 25 years of service, age notwithstanding. Consequently, many nonunion and union employees previously left in their 40s and 50s with full pensions and health coverage.

"These [management retirement reforms] will do little now because of the large number of people already in the system or drawing benefits," said Mr. Bland, who arrived at the authority 10 months ago. "But over time -- 10, 15, or 20 years into the future -- the authority will accrue substantial savings."

An examination of Port Authority records produced numerous examples of employees able to take advantage of the pension program that has come under fire.

Operations Manager Stephen Banta will be eligible for a Port Authority pension in May although he was hired only eight years ago. One year ago, he paid $172,776 to buy back prior service that included managing the light-rail system in Dallas.

Besides Mr. Millar, Mr. George and Mr. Skoutelas, other authority management pension recipients continuing to work elsewhere include Allen Biehler, now Pennsylvania transportation secretary; James Barthen, vice president of affairs for the Pittsburgh Symphony Orchestra; Jason Fincke, executive director of the Builders Guild of Western Pennsylvania; and Norm Voight, a University of Pittsburgh engineering instructor.

Michael J. Scanlon, 58, has been receiving $4,452 a month since 1993 after accepting a one-time early retirement incentive at age 45. The authority's former operations director, who started at age 19 as a messenger, is now the top transit executive in California's Silicon Valley.

The Port Authority continues to provide health, vision, dental and prescription policies for all of the ex-administrators, plus a $5,000 life insurance policy.

A recent report by a consulting firm said the authority will have to pay $26.7 million this year to provide more than 3,000 retirees and spouses with health and other insurance, including payments for Medicare Part B. The cost has been projected to rise to nearly $50 million a year over the next decade for retirees alone.

"Health care for life is a rich benefit," Mr. Onorato said. "County employees have to be 60 years old to retire, and they get no health care. [The Port Authority] is paying for 3,000 people, and I'm paying zero."

An audit performed on behalf of the special Pennsylvania Transportation Funding and Reform Commission that examined road, bridge and transit needs showed Port Authority pension plans that cost virtually nothing in the 1999-2000 fiscal year will cost $20 million this year, mostly for the pension plan covering management.

Retirees now outnumber active employees, higher wages result in paying out higher benefits and life spans continue to increase, all exacerbating the authority's short- and long-term funding challenges.

As of Jan. 1, 2005, the management pension plan had a market value of $62.1 million, making it about 30 percent underfunded.